Starting a Company in Switzerland: GmbH, AG or Sole Proprietorship?

Once you’ve decided to start a business in Switzerland, one of the first decisions is which legal structure to choose.

For most founders, the choice comes down to three options: a sole proprietorship (Einzelfirma), a GmbH or an AG. Each has different requirements around capital, liability, ownership and administration, and those differences can have a real impact on how your business operates.

There is no single structure that works best for every business. A freelance consultant starting alone has very different requirements from a founder launching with several shareholders or building a company that expects to bring in external investment.

The best place to start, therefore, is with the business you are planning to build and what you need from its legal structure.

GmbH, AG or sole proprietorship: the three structures at a glance

Before looking at each structure in more detail, this table gives you an overview of the main differences.

The capital requirements are usually the most immediately visible difference, but they are only one part of the decision. Liability, ownership, future financing and the level of administration involved can be equally important.

When does a sole proprietorship make sense?

A sole proprietorship can be an attractive option for someone starting a business alone, particularly where the business is closely connected to their own skills or services. Consultants, freelancers and tradespeople, for example, often begin this way.

There is no statutory minimum capital and no requirement for a notary to establish the business, which makes the initial setup relatively straightforward. Commercial Register registration isn’t necessarily required from the first day either; it generally becomes mandatory for a sole proprietorship once annual turnover exceeds CHF 100,000.

However, this simplicity comes with an important consideration around liability. A sole proprietorship is not legally separate from its owner, so the owner is personally responsible for the business’s obligations. In practice, this means business debts and other financial liabilities can extend to the owner personally if the business cannot meet them. This is quite different from a GmbH or AG, where the company exists as a separate legal entity and shareholder liability is generally limited.

Ownership is another consideration. A sole proprietorship has one owner, so founders who plan to build the business with co-founders, introduce other shareholders or seek equity investment will need to consider whether a GmbH or AG would be more appropriate.

There is also an administrative distinction that can sometimes cause confusion. Registration in the Commercial Register and recognition as self-employed for AHV purposes are separate matters, and self-employed status is assessed by the relevant compensation office.

A sole proprietorship is therefore often considered by founders who are working independently, want a relatively simple structure and don’t need the ownership framework or legal separation offered by a GmbH or AG.

→ Read our guide to setting up a sole proprietorship in Switzerland.

When does a GmbH make sense?

A GmbH (Gesellschaft mit beschränkter Haftung) creates a company that is legally separate from its shareholders. This separation is one of the main reasons founders consider moving beyond a sole proprietorship, particularly where the business will take on greater financial or contractual obligations.

Shareholder liability is generally limited to the company’s assets, assuming the relevant legal requirements are met, and the company can have one or more shareholders. This makes a GmbH suitable both for an individual founder and for businesses with several owners.

The formation process is more formal than for a sole proprietorship. A GmbH requires at least CHF 20,000 in share capital, as well as completing incorporation documents, notarisation and registration in the Commercial Register.

It’s useful here to distinguish between share capital and the cost of setting up the company. The CHF 20,000 shouldn’t be treated as a formation fee. Where the capital is contributed in cash, it’s normally deposited into a capital deposit account during the formation process and, once registration is complete, can be released to the GmbH for legitimate business purposes.

For founders who have the required capital and want a separate legal entity, limited shareholder liability and a structure that can accommodate more than one owner, a GmbH can offer a useful balance between flexibility and formality.

→ Read our guide to starting a GmbH in Switzerland.

When does an AG make sense?

An AG (Aktiengesellschaft) is also a separate legal entity, but its capital and governance requirements differ from those of a GmbH.

The minimum share capital is CHF 100,000. At formation, at least 20% of the share capital must be paid in, subject to a minimum paid-in amount of CHF 50,000. The company has a board of directors elected by the general meeting of shareholders, with management responsibilities determined by its organisational arrangements.

An AG may be particularly relevant where a business expects more substantial capital requirements, anticipates changes to its shareholder base or is being structured with future investment in mind. Its ownership model can also offer advantages in situations where shares may change hands over time.

Where external equity investment forms part of the longer-term plan, it is worth considering the likely investors and future ownership structure before forming the company. These factors can influence whether an AG or GmbH provides the more appropriate framework as the business develops.

A growing business does not, however, necessarily need to be an AG. Many successful Swiss companies operate as GmbHs, and the choice should reflect the company’s expected ownership, financing and governance requirements rather than its size alone.

What does it cost to start each type of business?

The cost of starting a company in Switzerland depends on the legal structure and the circumstances of the individual business, and comparisons can become misleading when share capital and formation costs are treated as the same thing.

Beyond the minimum capital requirements discussed earlier, the separate costs of formation can include Commercial Register fees, notary fees, professional or fiduciary advice, document preparation and capital deposit account charges where applicable.

Commercial Register fees vary according to legal structure. As of September 2026, current official guidance gives approximate basic registration fees of CHF 80 for a sole proprietorship and CHF 420 for a GmbH or AG, with additional charges possible depending on the registration. You can check the latest Commercial Register fees on the Swiss SME Portal.

This makes the initial price of formation only one factor in the decision. The more useful comparison is the overall structure each option provides and whether that structure is appropriate for the way the business will operate.

How long does it take to start a company in Switzerland?

There is no single guaranteed formation time because the process depends on both the legal structure and the circumstances of the company.

A sole proprietorship generally involves fewer formal formation steps because there is no share capital deposit or notarial incorporation. Establishing a GmbH or AG requires additional stages, including preparing the company documents, arranging the share capital, completing the notarisation and submitting the company for entry in the Commercial Register.

Preparation can make a significant difference. Founders who have already decided what the business will do, where it will be based, who will own and manage it, and how it will be financed are in a much better position to move through the formation process efficiently.

Processing times can still depend on the organisations involved, so it’s best to avoid building a launch plan around an assumed fixed registration date. Avoiding unnecessary handovers between different providers can, however, help keep the parts of the process within the founder’s control moving.

Helvo brings key stages of the formation process together, including the capital deposit account and coordination with notary partners, helping founders manage those steps more efficiently.

Can you change your legal structure later?

The structure you choose when starting the business doesn’t necessarily have to remain the same throughout its life.

A self-employed consultant may begin with a sole proprietorship and later build a team, take on larger contracts or decide that a separate legal entity is more appropriate. Similarly, changes in ownership, financing or succession plans can lead an established business to reconsider its structure.

Moving from one legal form to another can, however, have legal, tax, accounting and administrative implications. Founders considering a change should therefore take appropriate professional advice rather than viewing restructuring as a simple administrative update.

Knowing that change is possible can still be helpful when making the initial decision. You need a structure that works for the business you are building now, while also considering where that business may be heading.

After you've chosen your legal structure, what happens next?

Once you have chosen the legal structure, you can move on to the practical formation process. The next steps will depend on which route you take.

For a sole proprietorship, that includes establishing your self-employed status, understanding whether Commercial Register registration applies and putting the financial administration in place. Our guide to setting up a sole proprietorship covers these steps in detail.

For a GmbH, you will need to prepare the company details, arrange the CHF 20,000 share capital, complete the notarisation and register the company in the Commercial Register. You can follow the full process in our step-by-step guide to starting a GmbH.

For an AG, the process includes defining the company and ownership structure, arranging the required share capital, completing the formal incorporation and registering the company. Our dedicated AG formation guide takes you through those requirements.

Registration is also the point at which the focus begins to shift from forming the company to operating it. The business needs to be able to invoice customers, receive payments, pay suppliers, manage expenses and maintain a clear view of its finances.

For a GmbH or AG, this transition also includes moving from the capital deposit stage to the everyday financial setup the company needs after registration.

Helvo helps Swiss founders manage that transition by bringing the business account, payments, invoicing and financial management together in one place.

→ Explore the Helvo business account.

Common mistakes when choosing a legal structure

Focusing too heavily on the initial cost

Formation cost matters, particularly for an early-stage business, but it should be considered alongside liability, ownership, capital requirements, administration and future plans. A structure that is inexpensive to establish may not necessarily provide what the business needs as it develops.

Treating share capital as a formation fee

The CHF 20,000 required for a GmbH is share capital rather than a CHF 20,000 cost of incorporation. The same principle applies to the share capital of an AG. The capital belongs to the company once it has been formed, while notary, registration and professional fees are separate formation expenses.

Assuming an AG is the natural choice for a bigger business

An AG has a higher capital requirement and a different ownership and governance structure from a GmbH, but those characteristics do not automatically make it more suitable for a growing company. The appropriate structure depends on the company’s particular financing, ownership and governance needs.

Overlooking personal liability

The relative simplicity of a sole proprietorship can make it attractive, particularly at the beginning, but founders should understand the implications of there being no legal separation between the owner and the business.

Choosing solely for the business you have today

Nobody can predict exactly what a business will look like several years from now, but some likely developments are worth considering. Additional owners, employees, investors, larger contracts or increased financial risk can all affect what you need from the legal structure.

Making the decision purely on tax

Tax is an important consideration, but the outcome depends on factors including company profits, personal income, location and how money is taken from the business. There is no universal rule that makes one legal structure the most tax-efficient choice in every situation.

Where tax is likely to have a significant influence on the decision, advice based on the founder’s and company’s actual circumstances is more useful than a general comparison.

Choosing the structure that fits your business

Choosing between a sole proprietorship, GmbH and AG becomes easier once you move away from the idea that one structure must be better than the others and focus instead on what your business requires.

Consider who will own the business, the level of financial and contractual risk involved, how much capital you can commit and whether you expect to bring in other shareholders or investors. It’s also worth thinking about how much administration is appropriate at this stage and how the business may develop over the next few years.

Those considerations should give you a much clearer idea of which legal structure is likely to fit your business. From there, you can move into the detailed formation process for your chosen structure and start putting the practical foundations in place to operate the business.

Frequently asked questions about choosing a Swiss legal structure

GmbH or sole proprietorship: which is better?

The answer depends on the business and the founder’s circumstances. A sole proprietorship offers a relatively simple route for someone starting alone and has no statutory minimum capital requirement, although the owner and business are not separate legal entities and the owner generally has personal liability.

A GmbH requires CHF 20,000 in share capital and involves a more formal formation process. In return, it creates a separate legal entity, generally limits shareholder liability and can accommodate one or more shareholders.

The nature and risk profile of the business, available capital and future ownership plans are all relevant when comparing the two.

How much does it cost to start a company in Switzerland?

The cost varies according to legal structure and the circumstances of the business. A sole proprietorship has no statutory minimum capital, while a GmbH requires CHF 20,000 in share capital and an AG requires CHF 100,000, with at least CHF 50,000 generally paid in at formation.

Share capital should be considered separately from formation costs, which can include Commercial Register fees, notary fees, professional advice and other services required during incorporation.

How long does company formation take in Switzerland?

There is no standard formation time that applies to every business. A sole proprietorship generally has fewer formal steps, while establishing a GmbH or AG also involves preparing incorporation documents, arranging capital, notarisation and Commercial Register registration.

The legal structure, complexity of the company and processing times of the organisations involved can all affect the overall timeframe. Having the necessary information and documents ready, and avoiding unnecessary handovers between different providers, can help keep the process moving.  

Helvo brings key stages of the formation process together, including the capital deposit account and coordination with notary partners, helping founders complete the steps they can control more efficiently.

Which legal structure is most suitable for my situation?

The main factors to consider are who will own the business, whether you need legal separation between the business and its owners, the financial risks involved, your available capital and your future plans for shareholders or investors.

Where the choice has significant tax, liability, investment or ownership implications, professional advice can help you assess those factors in the context of your specific business.

This article provides general information and does not constitute legal, tax, accounting or financial advice. The appropriate legal structure and its implications depend on the circumstances of the business and its owners. Check current official Swiss requirements and seek qualified professional advice where appropriate.

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